As Windstream builds out diverse routes for its wholesale and carrier segment by connecting to more carrier hotels and landing, the service provider puts itself in a more compelling position of growth.

Cowen and Company said in a research note that Windstream can gain an upper hand by building out long-haul and metro network routes for wholesale services in markets that are less saturated.

“Competition and pricing remain intense, and we believe success will be partly driven by unique/diverse routes as common routes become quickly commoditized,” Cowen said in a research note. “As such Windstream’s RLEC roots make it a compelling wholesale transport carrier as it focuses on attractive less popular routes while secular demand for bandwidth is making its way downstream.”

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One of the hallmarks of Windstream’s wholesale service offerings is offering 100G connectivity--one that includes wavelengths, Ethernet, MPLS, and IP services--to data centers. The telco recently announced a partnership with 365 Data Centers and a presence in three QTS facilities, including the Chicago Mega Data Center.

But data centers are just one area where Windstream is finding that its wholesale division can make an impact. The service provider has been diversifying the focus of the wholesale division beyond selling to just traditional carriers by looking for opportunities with media and even cable operators who are looking to enhance their out of region business service capabilities.

“Windstream has invested in its salesforce to market beyond carrier customers and is now targeting enterprise verticals (especially high-margin content/media), international, and cable companies (a growing vertical as MSO’s are looking to go national) for its wave and Ethernet transport services,” Cowen said.

That’s not to say that the service provider does not face near-term challenges, particularly from network grooming from its wireless customers who are transitioning off of TDM to IP-based Ethernet services.

This had a clear effect on Windstream’s second quarter wholesale revenues which were $160 million, down 7 percent year-over-year. Core carrier and wholesale revenues declined $1 million sequentially to $149 million.